March Madness: the brackets are now filled in by the “big four”…

Thursday, March 15, 2007

• Focus on high-deductible plans, Health Savings Accounts, tax credits
• Medi-Cal & “uninsurable” recipients would receive bare bones coverage
• Proposal would undermine 23 mandates like cancer screenings & second opinions

New on the Health Access WeBlog: Certified Rules; A Tale of Two States; The New 300; Rationing; LA Story; Paying to Be Uninsured; A Tonik for Young People

Assembly Republicans stood before Mercy General Hospital in Sacramento Wednesday and unveiled a package of 18 proposals that they believed could help resolve a growing health care crisis by “maximizing choice, reducing cost, increasing access.’’ Read a copy of the Assembly Republican press release here.

The plan relies heavily on the “market’’ to hold down health care costs and ensure that more people receive coverage. Assembly Republican Leader Mike Villines, R-Fresno, said that while other proposals for “socialized medicine’’ were “well-intentioned,’’ they wouldn’t work because the proposals would cost too much and lead to increased taxes.

The proposal was welcomed into the year’s health care debate, in hopes that the Assembly Republicans would engage rather than simply oppose health reform measures. However, consumer advocates generally opposed many of the proposals, although there were items of potential consensus.


A complete list of the Republican bills can be found here, but some of the foundational bills seek to reduce cost by reducing care or coverage. The plan features tax credits and eliminating state oversight and consumer protections, generally watering down coverage by either reducing benefits, or increasing deductibles.

Health Savings Accounts and High Deductible Plans. Many proposals would conform state law to federal law and allow employers and individuals to receive tax credits for contributing to Health Savings Accounts. Health Savings Accounts, by definition, are only available to those with High-Deductible Plans, so such a tax credit would be using public money to encourage underinsurance. Consumer advocates believe these plan do not control costs, but merely create financial barriers and shift costs to individuals.

* AB84 (Nakanishi) – HSA tax credits for individuals
* AB85 (Nakanishi) – HSA tax credits for businesses
* AB245 (Devore) — HSA tax credits for individuals
* AB1377 (Nakanishi) – directs CalPERS to offer high-deductible plans and HSAs for public employees and retirees
* AB1635 (Strickland) – health opportunity accounts for Medi-Cal enrollees
* AB1378 (Nakanishi) — HSAs and high-deductible plans for those with “pre-existing conditions.”

Other tax break bills include AB1040 (Duvall) to expand state tax deductions for health care, dental and vision expenses, and AB1592 (Huff) to create a new tax credit for doctors who provide charity care. There were no details on how any of these proposals would be paid for in the budget.

Relaxing Insurance Protections and Oversight. One proposal would allow insurers to sell products across state lines, and thus avoiding strong California consumer protections, such as the right to appeal HMO decisions to deny care. Another bill is more explicit in simply allowing insurers to offer products that do not include some of all of the 23 required benefits, such as coverage of cancer screenings, pap smears, or diabetic care. Such bills would limit government regulation on health plans, exposing consumers to an uncontrolled marketplace that could further shift costs and risks on individuals.

* AB1214 (Emmerson) –allowing insurers to ignore minimum benefit rules
* AB1644 (Niello) — allowing out-of-state insurers in without a California license and outside California consumer protections

There was no claim that any of these proposals would significantly reduce the number of uninsured. No public programs would be expanded. Employers would continue to not have any obligation to provide any kind of coverage to their employees – leaving workers in the lowest paid positions to hunt for health insurance in the most expensive way, on the individual insurance market with no guarantee that coverage will be affordable or available if they have a “pre-existing condition.”


One spotlighted idea by the Assembly Republicans is AB1635 by Audra Strickland (R-Moorpark), which would give Medi-Cal recipients the choice to have a health savings account and a bare-bones high-deductible plan combination to “put them in charge of their own health care decision making and lower costs for taxpayers.’’

A family of three living on $1,430 a month would be asked to make decisions between food, rent, utilities, or health care. Even if Medi-Cal provides an initial deposit in these savings accounts for these families, the impact could mean both health and financial consequences, especially when they need care, for diabetes, asthma, or a medical emergency. Research indicates that forcing people to place financial decisions before health concerns means that patients are half as likely to see the doctor, half as likely to get the care they need, and half as likely to fill their prescriptions.

Consumers who are asked to triage their own health care also do not always make the best medical choices – leading them to get sicker and wind up needed more expensive care. This is a cost – not a savings.

The Center for Budget and Policy Priorities has a paper on so-called “Health Opportunity Accounts’’ for Medicaid enrollees here.

AREAS FOR AGREEMENT: Republicans, however, did offer one concept that advocates could support. AB1312 by Bill Emmerson would increase Medi-Cal provider reimbursements to Medicare levels – an issue that does not seem to be in contention. There was no clear indication of how that increase would be funded.

THE STORY BEHIND THE STORY: Additionally, the “real person’’ who spoke at the press conference that Assembly Republicans touted as someone who could benefit from their plan – a 22-year-old restaurant worker – turned out to be a poster child for standards for employer-based coverage, minimum benefit mandates, and expanded public programs. (She doesn’t receive health care through her job; her insurance broker who sold her a high-deductible plan suggested that if she got pregnant, there’s a state program called AIM – Access for Infants and Mothers, that would take care of her so her insurance would not have to.) Read about the background of person at the Health Access WeBlog here.

ALL PROPOSALS NOW ON THE TABLE: Reports indicated it was unlikely that many of these bills will pass the state Legislature with the Democratic majorities. But discussion of these ideas – particularly high-deductible plans and Health Savings Accounts–will be part of the debate about the plans of Gov. Arnold Schwarzenegger and others.

For more information, contact the author of this report, Hanh Kim Quach, policy coordinator, Health Access California,

Health Access California promotes quality, affordable health care for all Californians.
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